“Big, of course, begets big. As more and more heavyweight VCs bid up the value of start-ups, others have to follow. It’s up or out. The result has been not only a new bubble in IPO markets, but the undercutting of a host of public companies that actually have to worry about profits. The classic examples would be Uber’s disruption of the taxi industry, or Airbnb’s of hotels.

This may be good for some of the VCs who can use the inflated values of unicorns on their books to raise more money and charge more management fees. But I can’t see how it is good for economic value overall. Massive debt financing of unprofitable firms to create monopolies might benefit some entrepreneurs and investors, but it distorts capital and labour markets and is anti-competitive.

As long as investors are willing to accept growth as a metric for value, the music can keep playing. But as the University of California academics note, “unicorns are mythical beasts”. This year, their financial reality, as well as the sustainability of the current funding model, will be subject to some much-needed testing.

Some of the new crop of hyped-up companies may eventually turn into Cheshire cats, disappearing and leaving behind only the grins of those who got out before the bubble burst.”

this is an excerpt from https://medium.com/financial-times/another-tech-bubble-could-be-about-to-burst